The Hang Seng in Hong Kong led the Asian markets, closing higher by 4.2%. The Nikkei in Tokyo closed higher by 2.8%.

Much of this positive sentiment was sparked by reports suggesting there's a plan in the works to shore up European banks weighed down by bad sovereign debt. The plan would allow this debt to be exchanged for bonds issued by the European Investment Bank, which is owned by the member states of the European Union, and funded by the European Financial Stability Facility, a company created by the countries that use the euro.

"If all the reports over the last 48 hours concerning plans to notably leverage up the EFSF and for the EU to aggressively recap banks end up as reality in a few weeks' time, then markets will likely rebound strongly from here," wrote Reid

But the Deutsche Bank analyst was still skeptical of the plan going forward: "Does it really have the full blessing of the Germans, the ECB and the rating agencies, to name but a few important players?" he asked.